EU's Barnier says time needed to review NYSE deal

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Published: Jan 24, 2012 4:09 p.m. ET

Last Updated: Jan 24, 2012 4:19 p.m. ET

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A key member of the European Commission signaled Tuesday that he wanted more time to review the proposed merger of NYSE Euronext NYX and Deutsche Boerse AG (DB1.XE, DBOEF), casting new uncertainty around a deal that many investors and analysts already have given up for dead.

Michel Barnier, the European Union's commissioner for internal market and services, on Tuesday placed a so-called "waiting reserve" on the matter, giving him leeway to potentially challenge a recommendation from EU antitrust regulators that the $17 billion combination be blocked.

"The decision that must be taken by the college is important, and the commissioner Michel Barnier who has been on a long, official trip to China, Japan and then London, hopes to take the personal time necessary before pronouncing on the issue," said a spokeswoman for Barnier in a statement Tuesday.

Competition authorities for the EU earlier this month determined that the merger of Deutsche Boerse and NYSE Euronext, which run Europe's two biggest derivatives exchanges, would represent a monopoly. The two companies together account for an estimated 93% of trading in listed futures and options.

While commissioners for the EU are widely expected to follow the antitrust division's recommendation, executives for NYSE Euronext and Deutsche Boerse have sought to press their case with commissioners directly in hopes of convincing them that competition authorities' analysis was flawed, and that their deal be allowed to proceed.

The European Commission is slated to discuss the matter at a meeting on Feb. 1.

A key member of the European Commission signaled Tuesday that he wanted more time to review the proposed merger of NYSE Euronext
NYX, -0.52%
and Deutsche Boerse AG (DB1.XE, DBOEF), casting new uncertainty around a deal that many investors and analysts already have given up for dead.

Michel Barnier, the European Union's commissioner for internal market and services, on Tuesday placed a so-called "waiting reserve" on the matter, giving him leeway to potentially challenge a recommendation from EU antitrust regulators that the $17 billion combination be blocked.

"The decision that must be taken by the college is important, and the commissioner Michel Barnier who has been on a long, official trip to China, Japan and then London, hopes to take the personal time necessary before pronouncing on the issue," said a spokeswoman for Barnier in a statement Tuesday.

Competition authorities for the EU earlier this month determined that the merger of Deutsche Boerse and NYSE Euronext, which run Europe's two biggest derivatives exchanges among many other markets, would represent a monopoly. The two companies together account for an estimated 93% of trading in listed futures and options.

While commissioners for the EU are widely expected to follow the antitrust division's recommendation, executives for NYSE Euronext and Deutsche Boerse have sought to press their case with commissioners directly in hopes of convincing them that competition authorities' analysis was flawed, and that their deal be allowed to proceed.

The European Commission is slated to formally discuss the matter at a meeting on Feb. 1.

Officials in Barnier's internal markets and financial services directorate have for years sought to boost competition against incumbent exchanges and clearing houses, so officials in that part of the commission bureaucracy may be unsympathetic to the arguments being made by Deutsche Boerse and NYSE Euronext.

Barnier has separately backed an expansion of the EU's Markets in Financial Instruments Directive, or MIFID, which is seen upping competition among derivatives markets and tightening oversight of private share-trading platforms and financial advisors.

The commissioner already is familiar with both Deutsche Boerse and NYSE Euronext because his department deals with the exchanges.

The exchanges have pitched their deal, which would create the world's largest platform for share listings and a dominant player in European stocks and derivatives trade, as the chance for Europe to create a regional champion that could represent the EU in globalizing financial markets.

Reto Francioni, chief executive and chairman of Deutsche Boerse, called the merger a "great chance for Europe" in remarks Tuesday at an event hosted by the company. Manfred Gentz, the company's supervisory board chairman, warned that Europe could not hope to compete on the world stage with its current "scattered exchange landscape."

"Today, markets must be viewed globally, not on a national, local or regional level," Gentz said, adding that the EU appears to ignore the global dimension. Exchange executives have also argued that the EU antitrust review overlooked competition from over-the-counter derivatives markets, which are larger than those supervised by exchanges.

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